Fair game

25 October 2007 By Mike Verdin

In attacking the Italian insurance giant, activist investor Algebris has taken on a huge target. Generali is at the centre of the Italian financial world. But it is more vulnerable than it first appears, particularly over its corporate governance.

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Fondazione Cariplo, the banking foundation, said it was open to talks with Algebris over the future of Generali, the Italian insurer.

"If there is willingness to cooperate and add value we are ready to have a dialogue with Algebris," Giuseppe Guzzetti, the foundation's chairman, said.

The comments followed Algebris's demand for a change in corporate governance at the Italian insurer and improvements to its operating performance. In a letter to Generali on October 24, Algebris demanded

1) earnings, dividend, operating result and combined ratio targets set three to five years ahead.
2) cuts to the fixed component of managers' pay.
3) a change in management structure, including a reduction to one in chief executives, and a nonexecutive chairman.
4) resolution of conflicts of interest between Mediobanca, Mediobanca's shareholders and Generali.

Generali said it welcomed all opportunities for constructive dialogue with current and potential shareholders.

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